The UAE Commercial Companies Law Opens the Door to Relaxing Restrictions on Foreign Ownership

20 November 2017

The UAE Commercial Companies Law Opens the Door to Relaxing Restrictions on Foreign Ownership

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What has changed

The United Arab Emirates (UAE) government is now explicitly empowered to exempt certain companies and sectors from the 51% local ownership requirement applicable in the UAE mainland.

The 2015 Federal Commercial Companies Law (CCL) encompassing the local ownership requirements has been amended, allowing the UAE Council of Ministers to identify sectors and companies that may be either majority owned or wholly owned by foreign shareholders.

The amendment was issued by Decree pursuant to Law No. 18 of 2017 and came into force on 28 October 2017.

This key development is in line with the UAE Vision 2021 and follows numerous recent UAE government statements in various forums regarding its intention to pass direct foreign investment regulations to relax foreign ownership in certain limited sectors.

What it means for you

This landmark development is likely to attract significant new interest in foreign investment into the UAE and also lead to restructuring and revisions in existing investment structures across those sectors affected.

Which sectors will be relaxed

Based on previous government statements, we expect that the exempt sectors will be highly selective and cover strategic industries or those having a major impact on key government priorities such as innovation, technology or the environment.

What you need to do now

There is no immediate action to be taken but you should keep a close watch for the enactment of the Council of Ministers Decree listing the exempt sectors. There is no clear timeline on the enactment of this decree or the scope of the decree, but the fact that the key legislation in this regard (the CCL) has been revamped in preparation for the relaxation of the foreign ownership restrictions, confirms that the change is imminent.

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